Ethanol subsidies have been around since 1979- far before the concept of “green fuel” became popular in American society. In the wake of the 1970’s oil shocks, and even today, the concept was appealing- if we could find a way to decrease our reliance of foreign oil, our carbon footprint and limit pain at the pump in one fell swoop, wouldn’t it be worthwhile?
And yet, here we are, over 30 years later, embroiled in nearly perpetual conflict with Middle Eastern oil producers, paying $4 a gallon for a gas blend that burns at 2/3 the efficiency of pure gasoline, and watching Al Gore’s Inconvenient Truth on rerun. To boot, the price of corn is at a 29 month high with our stockpiles at near all-time lows, while food prices are surging worldwide. Somewhere along the way, it seems as though our ethanol incentives, paid out to the tune of $5.4 billion in 2010, failed us.
Not convinced? Just take a look at price escalation since 2005, when the Energy Policy Act of 2005 pushed the U.S. government “all-in” on ethanol through mandated production and consumption. While crude has historically been regarded as a commodity perpetually on the rise, with the institution of the Energy Policy Act, its rate of increase has been surpassed by that of corn, which boasts an average monthly performance of 2.2%, compared to crude at a measly 1.5%.
What if we, as a country, begin to realize that ethanol subsidies may be doing more harm than good (increasing food prices without denting oil prices)… could we see the death of ethanol? Doubtful, as Iowa remains one of the first stops on the campaign trail, but the times, they are a-changing… and you never do know.
It surely doesn’t seem like ethanol ethanol incentives are worth the price tag at this point, especially with gas prices floating dangerously near all-time highs. Look out below in Corn if more and more people come to realize this.
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